The District did not have adequate internal controls for ensuring compliance with allowable activities and costs and restricted purpose requirements.
Assistance Listing Number and Title: 32.009, COVID 19 – Emergency Connectivity Fund Program
Federal Grantor Name: Federal Communications Commission
Federal Award/Contract Number: ECF202200920, ECF222118642, ECF202201883, ECF202202246
Pass-through Entity Name: N/A
Pass-through Award/Contract Number: N/A
Known Questioned Cost Amount: $395,822
Prior Year Audit Finding: N/A
Background
The Emergency Connectivity Fund (ECF) Program provides funding to meet the needs of students and school staff who would otherwise lack access to connected devices and broadband connections sufficient to engage in remote learning. This is referred to as “unmet need.” In fiscal year 2023, the District spent $395,822 in ECF Program funds to purchase laptops and Wi-Fi hotspot services for students and school staff.
Federal regulations require recipients to establish and maintain internal controls that ensure compliance with program requirements. These controls include understanding program requirements and monitoring the effectiveness of established controls.
Allowable activities and costs
ECF Program recipients may only seek reimbursement for eligible devices and services provided to students and staff with unmet need. Recipients are prohibited from seeking reimbursement for eligible equipment and services used solely at the school or held for future use (in other words, warehousing).
Restricted purpose – unmet need
When submitting applications to the Federal Communications Commission, schools only had to provide an estimate of their students’ and staff’s unmet need. However, when requesting reimbursement, the District could only request program funds for eligible equipment and services provided to students and school staff with actual unmet need.
Description of Condition
Allowable activities and costs/restricted purpose – unmet need
The District estimated unmet need for eligible equipment and services when it applied for ECF Program funds. However, our audit found the District’s internal controls were ineffective for ensuring it documented the determination of actual unmet need and only requested reimbursement for equipment and services provided to students and school staff with unmet need. Specifically, the District purchased laptops and Wi-Fi hotspot services based on its estimate of unmet need, and it requested reimbursement for these purchases totaling $395,822. However, the District did not maintain documentation showing it provided each laptop and
Wi-Fi hotspot service paid with program funds to a student or employee with unmet need.
We consider these deficiencies in internal controls to be material weaknesses that led to material noncompliance.
Cause of Condition
Allowable activities and costs/restricted purpose – unmet need
The District experienced turnover in the position responsible for managing this program, and current staff could not locate records supporting actual unmet need.
Effect of Condition and Questioned Costs
Allowable activities and costs/restricted purpose – unmet need
Because the District did not have documentation supporting whether it provided eligible equipment and services to students and school staff with actual unmet need, it cannot demonstrate compliance with the program’s requirements. Given the nature of the program and circumstances, it is likely that at least some of the equipment and services the District charged to the award addressed unmet needs. However, the lack of a documented assessment of students’ and staff’s actual unmet need means that all costs are unsupported. Since we do not have a reasonable basis for estimating how much of the District’s expenditures are allowable, we are questioning all unsupported costs.
Federal regulations require the Office of the Washington State Auditor to report known questioned costs that are greater than $25,000 for each type of compliance requirement. We question costs when we find the District does not have adequate documentation to support expenditures.
Recommendation
We recommend the District work with the awarding agency to determine audit resolution.
We further recommend the District establish and follow internal controls to ensure staff fully understand the requirements for ECF awards. Specifically, the District should request reimbursement only for eligible equipment and services provided to students and staff with unmet need, and maintain documentation demonstrating compliance.
District’s Response
We recognize the importance of internal controls in managing tax dollars. We entered into this agreement with the FCC believing we met the criteria for funding. With the assistance of a third-party administrator, we adhered to the guidelines as we understood them. We conducted a needs survey and determined that replacing end-of-life Chromebooks was a reasonable necessity. However, due to staff turnover, we were unable to document, at that specific moment, which students received those Chromebooks (to the auditors' satisfaction per FCC requirements). To ensure equitable access to online learning during the hybrid school model, we provided all students with district devices. We do not intend to use FCC/ECF Funds in the future.
Auditor’s Remarks
The State Auditor’s Office is sympathetic to the significant challenges the District faced during the COVID-19 pandemic, and deeply respects its commitment to student learning despite these challenges. The State Auditor’s Office knows that in many cases, governments across Washington received significant pandemic-era federal funds without also receiving clear guidance on how to use them. Then, and now, the State Auditor’s Office continues to advocate for clear, timely guidance from federal agencies to make sure Washington governments are not put in a difficult position at audit time.
However, when auditing federal programs of any kind, governments must provide documentation to substantiate that they met the award requirements. As is our practice and audit standards require, we will review the status of this finding during our next audit. We value our partnership with the District in striving for transparency in public service.
Applicable Laws and Regulations
Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), section 516, Audit findings, establishes reporting requirements for audit findings.
Title 2 CFR Part 200, Uniform Guidance, section 303, Internal controls, describes the requirements for auditees to maintain internal controls over federal programs and comply with federal program requirements.
The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 935, Compliance Audits, paragraph 11.
Title 47 CFR Part 54, Universal Service, Subpart Q, Emergency Connectivity Fund, describes the ECF Program requirements.